Friday October 22, 2004 - IOI Corp Bhd is looking to turn in anotherrecord performance for its current financial year ending June 30, 2005,spurred by a projected 15% increase in crude palm oil (CPO) production byits plantation division.

Judging by the high fresh fruit bunches (FFB) yield in the first quarter(July to September), we believe it's going to be another record year, saidexecutive chairman Tan Sri Lee Shin Cheng. Last year, the group's totalFFB yield was about three million tonnes.

For its financial year ended June 30, 2004, the IOI group saw its pre-taxprofit grow 37% to RM1.11bil, surpassing the RM1bil mark for the firsttime in its history, on the back of a strong RM4.99bil in turnover.

Referring to the current year, Lee said: We are not unduly worried aboutthe prevailing low CPO price (of RM1,400 per tonne) as we have soldforward at significantly higher price levels.

The average cost of production at the group's plantations is about RM650 atonne.

We would be comfortable if CPO is traded at an average of not less thanRM1,550 per tonne, Lee said after the AGMs of IOI Corp, IOI Properties Bhdand IOI Oleochemical Industries Bhd in Putrajaya yesterday.

He said the CPO price had been under a bit of pressure of late mainlybecause of the bigger soybean harvest in the United States. However, heexpects the CPO price to recover between January and March next year dueto the low crop seasons.

Lee said the IOI group would continue to strengthen its position as one ofthe world's largest integrated palm oil players through its plantations,mills, refineries and the downstream speciality fats and oleochemicalsoperations of Loders Crocklaan and IOI Oleochemical Industries.

Loders Crocklaan's 700,000-tonnes-per-year palm oil refinery in Rotterdam,slated for completion by December next year, would provide the IOI groupwith a substantial share of the European Union palm oil market, he said.

We expect Loders will then be able to register 20% growth in profits forthe financial year ending June 30, 2006,” he added.

On the local front, Lee said the completion of the group's acquisition offive Sabah plantation companies with a combined hectarage of 21,722ha anda palm oil mill had also resulted in an increase in its oil palm holdingsto 145,000ha, thus reinforcing its position as a leading palm oilproducer.

Over the past few years we have been active on the acquisition front.Probably, we will try to consolidate but if new opportunities arise, wewill look into them, he added.

Asked for his response should the CPO price fall below RM1,400 a tonne,Lee said: I would urge the Malaysian Palm Oil Board to start burning palmoil as fuel for power plants in Malaysia.

According to Lee, palm oil has the potential to become the future biofuelor biodiesel energy, which is environment friendly and currently wellfavoured in developed countries like Germany, Japan and South Korea. Infact, he said, IOI had received purchase enquiries from multinationalcompanies in those countries.

A biofuel production plant is a highly capital-intensive project for adeveloping country like Malaysia, but perhaps through the setting up of aconsortium, we will be able to do so in the future, he said.

On IOI's property business, executive director Datuk Lee Yeow Chor saidthe group planned to further develop the IOI Resort project in Putrajayaover the next two years.

We want to position the 430-acre IOI Resort as a prime address inPutrajaya for people to live, work and play, he said. IOI Resort comprisesfour essential components: a golf course, hotel, offices and residences.

We will embark on high-quality properties with the construction of 260units high-end condominiums, to be followed by a further 150 units as wellas bungalows for the more affluent, Lee said.